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Tuesday, December 29, 2015

Imports of Syrian goods into the United States have fallen dramatically since war broke out in the Mideast nation in 2011 and since the White House expanded the Syria Sanctions Program. Yet, despite the decline in U.S. imports from Syria, there are now disquieting trade statistics from 2014--the most recent complete data available--that should stir the attention of customs officials, police, and policymakers concerned about looted archaeology, stolen mosaics, and illicitly excavated coins trafficked illegally into the U.S.Overall, America imported about $429.3 million worth of declared goods from Syria in 2010. Last year, that total collapsed to roughly $12.4 million, a stark decline over the five year period.Moving in the opposite direction for a period of time were U.S. imports of antiques over 100 years old from Syria, whichspiked to $11 million in 2013, a spectacular 133% increase in declared customs value over the previous year. While this figure noticeably fell last year to roughly $4.9 million, the value is similar to the $4.7 million worth of imported antiques recorded in 2012.The 2014 statistic on antiques is striking because the five year trend line for imports of Syrian antiques failed to fade to black like other U.S. imports of Syrian goods. Instead, as the graphic above demonstrates, antiques constituted a decidedly large slice of the American import pie last year. They accounted for a whopping 40% of the value of all imports of every kind from Syria. In fact, goods classified by importers as Antiques of an Age Exceeding 100 Years under Harmonized Tariff Schedule (HTS) 9706 were the #1 import into the U.S. from Syria. There simply was no other import category that ranked higher in value than antiques, including the #2 import of Syrian anise and cumin seeds and juniper berries classified under HTS 0909.Notably, every Syrian import classified as an HTS 9706 antique was shipped to the customs district of New York City, the location of one of the largest and most important art and antiquities markets in the world.What we do not know is what kind of objects these "antiques" were. They may have been at-risk archaeological objects like cuneiform tablets or ancient pottery, deliberately mislabeled by smugglers as being "of an age exceeding 100 years." Customs officials need to find out.Enforcement officials also need to investigate the #3 American import from Syria in 2014, commodities classified by a code smugglers might use to disguise imports of ancient mosaics. Mosaics, of course, are architectural features made of stone, glass, and/or ceramic. They are spotlighted in the International Council of Museum's Emergency Red List of Syrian cultural property, which is why the import of $1.4 million worth of HTS 6802 goods--11% of the total value of all Syrian imports to the U.S.--is concerning. HTS 6802 is intended to cover worked monumental or building stone; mosaic cubes of natural stone; and artificially colored granules, chippings and powder of natural stone. Yet the code may have been used by traffickers to unlawfully classify 5th century mosaics.

Together, the declared imports of HTS 9706 and HTS 6802 goods accounted for 51% of the total imports of all Syrian commodities by value in 2014, a striking statistic that simply cannot be overlooked by cultural property watchers focused on spotting trafficked heritage objects that may have illegally piggybacked on legitimate international trade.Classified by HTS 9705 and amounting to approximately $303,000, collections of historical and archaeological material of Syrian origin was the #5 import by value in 2014. This number was almost a triple increase from the $118,000 imported the year before.Looking deeper into this trade category, we find that the bulk of HTS 9705 imports from Syria to the United States consisted of Numismatic (Collectors') Coins, Except Gold, classified by HTS 9705.00.0060, having a declared import value of approximately $265,000, which was a quarter of a million dollar jump from the exiguous value of $12,064 declared in 2013. Just like imports of Syrian antiques, every Syrian collectors' coin declared under this HTS categorywent through the New York City customs district. Were these coins ancient Roman, Byzantine, or Islamic like the ones identified on the Red List? Customs enforcement officials need to find out.Given the reasonable articulable suspicion that Syrian cultural contraband may be moving to the U.S. through ordinary channels of international trade, police and customs investigators are justified in scrutinizing import paperwork and asking detailed questions of importers and customs brokers that will confirm or dispel this suspicion. To protect cultural heritage in jeopardy, to defend against money laundering, and to protect against terror financing in Syria, it is vital to know exactly what cultural property has been shipped to the U.S. from Syria under the HTS 9705, 9706, and 6802 classifications and why heritage goods makes up such a large portion of imported Syrian commodities.
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Data source: CHL compiled, arranged, and assessed the import figures presented here using raw data collected by the U.S. International Trade Commission and the U.S. Bureau of the Census.Copyright notice: Although the data presented here is sourced from publicly available information, it is an original work of authorship that has been carefully selected, coordinated, arranged, and analyzed so that it is an original work of authorship subject to copyright protection as a compilation and/or a derivative work by CHL. The publication, retransmission, or broadcast of this compiled data is strictly prohibited without CHL's express consent.

Note: Import data is reported to U.S. Customs and Border Protection by the owner, purchaser, or licensed broker of the consignee. They file the entry documents, not the customs officials who are unable to inspect and document every cargo shipment. So whether cultural commodities are properly classified as HTS 9705 archaeological material or HTS 9706 antiques is the responsibility of the importer. In fact whether imports are falsely classified so that they can be smuggled across the border or whether they are mistakenly classified because of an error in judgment is a function of the importing party. The import classification process is a self-reporting system, part of a shared compliance program overseen by U.S. Customs that obliges the trade community to regulate itself and follow federal law. Shared compliance allows the U.S. to competitively engage the world in global commerce. Smugglers, nevertheless, will try to exploit gaps and loopholes.

____________________Text copyrighted 2015 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, and museum risk management. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission of any blog post without the express written consent of CHL is prohibited. CHL is a service of Red Arch Cultural Heritage Law & Policy Research, Inc.

Thursday, December 17, 2015

In the annals of
cultural property law, prosecutions targeting transnational antiquities
trafficking networks are rare. Even more rare are felony convictions. Scarcer still are prison
sentences.

So what happened this week to a pair of California gallery owners tied in with the "Museum Raids" cases is a momentous achievement, an example of careful and intelligent case development by the U.S. Attorney's
Office for the Central District of California, resulting in felony convictions for antiquities traffickers rather than a "seize and send" photo-op that cultural property watchers are accustomed to witnessing.

Jonathan and Carolyn Markell, aged 70 and 68 and owners of Silk Roads Design Gallery, were sentenced on
Monday for their role in an elaborate scheme that mixed international heritage
trafficking with tax evasion.

Calling the crime "significant," United States District Judge Dean D. Pregerson said it was “important to send a
message” to art collectors, gallery owners and museums that they should avoid
collecting and trading looted antiquities.

The court handed down an 18 month prison term to Jonathan Markell on a felony count of conspiring to import goods using false statements
in violation of 18
U.S.C. § 371 (conspiracy) and 18 U.S.C. § 542 (importing
goods using false statements). His wife,
Carolyn, received a sentence of probation on a felony charge of conspiracy to commit tax
evasion pursuant to 18
U.S.C. § 371. Jonathan Markell also pleaded guilty to
conspiracy to commit tax evasion.

“Mr. Markell’s greed placed his art gallery’s profits above the culture and heritage
of the people of Thailand,” said United States Attorney Eileen M. Decker in a press release.

There were no complaints about the court's 1 1/2 year sentence, even though prosecutors sought a 2 ½ year prison term for
Jonathan Markell because, in prosecutors' words, "it is clear that Jonathan Markell has no
respect for the law—not this nation's laws, nor those of other nations."

The attorneys pointed out the obvious to the court, that "it is rare that law
enforcement officials have the opportunity to catch a broker, bulk sellers, or
gallery owner that drives the illicit market for archeological resources."
That is why, they contended,

Defendant Jonathan
Markell’s antiquities smuggling case presents a unique opportunity to send a
message and afford adequate deterrence to the 'upper end' of the criminal black
market for looted archeological resources, i.e., the brokers and gallery owners
who sell their wares to the collectors. If we are able to diminish and
disincentivize the market (or demand) for illegal antiquities, then we may have
an equal effect on taking the monetary incentives out of the act of looting
itself. It is the market, or demand, which drives the looters at the ground
level to provide the supply of stolen antiquities to meet that demand.

Jonathan Markell’s sentence of 18 months behind bars perhaps is the most ordered by a court in a transnational antiquities trafficking case since U.S. v. Schultz, a federal case from 2002 that saw Frederick Schultz, a high profile and successful Manhattan antiquities dealer, sentenced to serve 33 months in prison after a jury found the defendant guilty of the felony of receiving stolen Egyptian antiquities that had been transported in interstate and foreign commerce in violation of 18 U.S.C. § 371 (conspiracy) and 18 U.S.C. § 2315 (the National Stolen Property Act).That case failed to serve as a warning to the Markells as the investigation into the husband and wife and their co-conspirators began the following year, in 2003 when a National
Park Service (NPS) special agent began to uncover the trafficking network that had been
smuggling archaeological material from Southeast Asia.In January 2008, federal
agents from several law enforcement agencies raided a variety of locations,
including four
museums in California. Police descended on the Los Angeles County Museum of
Art,
the Bowers Museum, the Pacific Asia Museum, and the Mingei Museum with
search warrants to “seize in place” ancient objects identified as potential evidence.
Officials simultaneously seized evidence from the Markell’s home as well as
their art gallery.

The museum raids
generated three published criminal cases:

United States v. Robert Olson and Marc Pettibone, et
al., which charged a conspiracy to
smuggle Southeast Asian artifacts, including from Thailand and Cambodia,
into the United States beginning in 2004;

United States v. Robert Olson and Jonathan
Markell, which charged a conspiracy to
smuggle Southeast Asian artifacts, including Burmese antiquities obtained
in Thailand beginning in 2003; and

United States v. Jonathan Markell and Carolynn Markell, which charged a conspiracy to commit tax fraud by
making false statements when donating smuggled artifacts to museums in an
effort to receive tax deductions.

[Sidebar: At least one
media report by the Pasedena
Patch suggests that legal action against unnamed museums resulted
in deferred prosecution agreements. These agreements do not appear in the court
system’s public files. It is possible that they are held privately by the U.S. Attorney's Office and not subject to public disclosure]

The Markells pleaded
guilty to criminal charges on April 16 after signing a written agreement with
federal prosecutors the previous month..

As part of the deal, both defendants conceded that they conspired to knowingly and intentionally
defraud the United States for the purpose of impeding, impairing, obstructing,
and defeating the lawful government functions of the Internal Revenue Service
(IRS) in the ascertainment, computation, assessment, and collection of income
taxes, by promoting and participating in a false charitable deduction scheme
for the purpose of improperly claiming charitable deductions on federal income
tax returns.

The Markells agreed to repatriate 337 artifacts by ocean-borne cargo to their countries of
origin, specifically China, Thailand, Cambodia, and Burma; to pay the $25,000
estimated shipping cost; and to cooperate with the IRS to calculate back taxes
and penalties from 2004 through 2007, estimated to be $39,891.

In a court pleading filed on December 3, attorneys for the government elaborated on the facts of the case:

In short, Jonathan and
Carolyn Markell jointly owned and operated the business Markell Imports, Inc.,
doing business as the Silk Roads Design Gallery ("Silk Roads"). The
Markells’ business model consisted of their purchase and importation of art,
antiques, and archeological resources from Southeast Asia, and their resale of
such merchandise through their Silk Roads art gallery in West Hollywood.

Part of their business
model included the intentional use of false declarations and statements in
United States Customs entry documents to “smuggle” or introduce the
archeological resources “antiquities” into the United States.

The lawyers flagged a contention made by the Markells, one that is often echoed by
ethically ambivalent antiquities dealers who complain that filling out customs
forms is too burdensome for small business owners:

During [a police interview], Jonathan Markell stated that he and Carolyn
Markell falsified the customs documents to disguise what they were importing
because the United States Immigration and Customs Enforcement classification
process is difficult if they actually identify a piece as an
"antique." Carolyn Markell agreed with her husband's statement.

The Markells further
justified their behavior by claiming that United States Customs forces people
to lie on import declarations because of the delay in clearing Customs if they
properly identify an object as an antique.

Prosecutors added that the Markells failed to fully disclose their criminal
conduct to investigators. “For example, they did not admit that Jonathan
Markell had conspired with [a] co-defendant to not only falsely describe
Burmese and Khmer antiquities in United States Customs import documents ... but
also to falsely declare the import value of those antiquities as 25% of their
true purchase price.”The attorneys said that neither defendant “admitted ...
that they knew that it was illegal to export archeological
resources/antiquities from the countries of China, Thailand, and Burma—which is
most likely the reason that the antiquities were falsely described in United
States Customs import documentation.”

Focusing on the pairs’ systematic
plan to dodge federal taxes, prosecutors noted that the operation “was
heavily dependent upon the ready availability of Southeast Asian antiquities
obtained ... through the antiquities smuggling scheme .... The Southeast Asian
antiquities smuggled into the United States ... were bundled and sold for approximately
$1,500. The[] $1,500 ‘package’ typically included antiquities from Ban Chiang,
Thailand, false sales invoices to reflect an earlier sales date, along with a
fraudulently inflated $5,000 appraisal that contained a fraudulent expert's
signature.”

During that discussion, she told the UC that she had been extremely worried
about the last shipment of antiquities that she and Jonathan Markell had
brought into the United States from Thailand in September 2006—which had
included 7 Burmese statues. She related to the UC that the President of the
United States had prohibited entry of any Burmese items into the country, and
that she had lost sleep worrying that their import shipment would be
intercepted by United States Customs authorities. She told the UC that she did
not care about being dishonest, but that she didn’t want to get caught.

Jonathan Markell, meanwhile, “brought up a Los Angeles Daily News
article about an individual that had been prosecuted for a tax evasion scheme
involving antiquities and a museum," according to prosecutors. "Jonathan Markell laughed about the article,
and then asked the UC if he thought that he (Jonathan Markell) was going to
jail (for the tax evasion scheme). Jonathan Markell told the UC that the person
who had been caught must have done something pretty stupid, and that the
government was not going to look at any donation under $10,000.”

The tax scheme relied on
the couples’ assumptions that customs officials would overlook mislabeled
illegal shipments and that museums and collectors would fail to conduct the due
diligence necessary to verify the archaeological objects’ legitimate
collecting histories.

Antiquities mostly from Thailand's Ban Chiang World Heritage sitewere used to fuel the fraud, according to recitals found in the plea agreement, which described how Jonathan Markell “solicited
co-conspirators to buy a 'charitable donation package' that included one or
more Ban Chiang antiquities to be donated to a charitable institution.” Then “Silk
Roads Design Gallery prepared false appraisals for donations of these
antiquities to charitable institutions, such as museums and universities using
another person’s name.” Jonathan Markell thereafter “contacted charitable
institutions to get them to accept his, defendant Carolyn Markell’s, and his
co-conspirators donations.” Specifically,
prosecutors alleged:

“On or about December 26,
2003, CAROLYN MARKELL sent an email to a museum representative regarding the
provenance of donated items as being a purchase in 1984.Defendant CAROLYN
MARKELL determined that she and defendant JONATHAN MARKELL would purchase items
to be donated from a certain co-conspirator. Between an unknown date and
January 2008, although defendant JONATHAN MARKELL knew that the seller of a
donated item could not appraise the item for tax purposes, he prepared
appraisals that falsely inflated the value of donation items he sold as part of
a "donation package" he sold to co-conspirators. … In or about April
2007, defendant JONATHAN MARKELL advised an unindicted co-conspirator to change
the listed purchase date on a museum donation form because it needed to appear
that the co-conspirator had held the item for years, namely, ten years, to take
the inflated value as a tax deduction. On or about March 10, 2006,
defendant CAROLYN MARKELL contacted a museum curator to discuss the museum's
policies and requirements. On or about June 14, 2006, defendant JONATHAN
MARKELL solicited a Thailand museum curator's electronic signature which he
fraudulently inserted on appraisals of items to be donated that he had
prepared. ... On or about March 27, 2007, defendant JONATHAN MARKELL
electronically mailed a request to the museum curator in Thailand to sign forms
to support co-conspirators' charitable donation tax deductions and to sign six
to eight blank forms in blue, to support fraudulently future donations. On
or about December 13, 2007, JONATHAN and CAROLYN MARKELL delivered donations to
a museum on behalf of a client. Around December 2007, defendant JONATHAN
MARKELL donated Ban Chiang antiquities to a museum on behalf of
co-conspirators, charging them $3,450 for the items and appraisals to support
an $11,425 charitable donation income tax deduction.

Meanwhile, from 2004
through 2007, the Markells regularly donated Ban Chiang artifacts to an
unidentified museum(s) and took a charitable tax deduction, “knowing the items
had been stolen from the country of Thailand.”

There are two types of
archeological resource looters: (1) the looter that digs up and collects
artifacts as a hobby for his or her own personal collection; and (2) the looter
that digs up artifacts for the purpose of selling them to brokers or gallery
operators. As with the protection of threatened and endangered wildlife
species, the key to protecting and conserving archeological resources is to
eliminate markets for illicit/looted antiquities. Without the existence of
brokers, middlemen, and gallery owners who are willing to knowingly and
intentionally profit from sales of parts and products of threatened or endangered
wildlife species or looted archeological resources, there is little monetary
incentive for wildlife poachers or archeological resource looters to engage in
their nefarious trades.

One might be tempted to
think that the archeological resource looter squatting in the deep mud and
steaming jungle highlands of Ban Chiang, Thailand is primarily to blame for the
devastation of pristine archeological sites and the information lost thereby—just
as one might be tempted to lay the bulk of the blame for the loss of the last
Northern White Rhinoceros at the feet of the poacher who killed it; but that
line of thinking is incorrect. It is individuals such as Jonathan Markell ...
the importers, the buyers, and the gallery owners who purchase and acquire such
archeological resources or wildlife products for profitable resale who are
primarily to blame for the underlying devastation. For these are the
individuals who create the markets that create the monetary incentives that
drive the poachers and looters into the fields.

The government's lawyers thereby laid the groundwork to argue for a prison term, “to reflect that seriousness
and to promote respect for the law and to provide just punishment for the
offense."Meanwhile, they made the important point that “[a]rcheological resources are non-renewable. The looting
of archeological resources causes widespread destruction of archeological sites
and results in the loss of archeological information which would be gleaned
from a properly excavated site."

They informed the court as well about the enormous
impact of cultural plundering on the Thai people. “Many villages throughout
Southeast Asia have been deprived of the opportunity to grow an economy based
on archeological tourism because their heritage and archeological resources
have been devastated by looting activity to supply to the purveyors of 'stolen
time,' such as defendant Jonathan Markell."

Prosecutors poignantly
added, "Criminal conduct, like that committed by defendant Jonathan
Markell in this case, serves to deprive individuals from other countries of
their own distinctive histories and heritages—in essence stealing not just
their antiquities, but their 'time and history."

Two witnesses reinforced these arguments when they testified this week at the sentencing hearing. One witness was the NPS agent who investigated the case, and the other was archaeologist
Dr. Joyce White, director of the Ban
Chiang Project housed at the University of Pennsylvania Museum.

Dr. White analyzed more than 10,000
artifacts, mostly from Thailand, which police obtained through Operation Antiquity, the code
name used by NPS, U.S. Immigration and Customs Enforcement Homeland Security Investigations, and IRS Criminal Investigation for the Museum Raids investigation.

In a court Declaration, Dr. White made clear that antiquities exported
from Thailand generally require a permit from the Thai Fine Arts Department. But, remarkably, she only saw one
or two samples of antiquities where a permit actually had been obtained despite the thousands of
samples examined.

Dr. White also noted that most
of the artifacts were found intact, indicating that they had been illegally dug-up. “Intact
artifacts are rare in archaeological sites and tend to come from human burials,”
which would require “large scale excavations.”

The prison term and felony convictions imposed by Judge Pregerson this week are hoped to decrease the incentive to industrially excavate overseas archaeological sites overseas and to deter smuggling of contraband cultural property
into the American marketplace.

2015 ABA Journal Blawg 100 Honoree

2014 ABA Journal Blawg 100 Honoree

2014 Daniel Webster International Lawyer of the Year award given to Rick St. Hilaire

"Rick St. Hilaire, who has become an authority on cultural heritage law, received the International Law Section’s 2014 Daniel Webster International Lawyer of the Year award at an Oct. 30 reception in Manchester, hosted by Sheehan Phinney Bass + Green." - NH Bar News, November 19, 2014

LexisNexis Top 25 Blogs

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Rick St. Hilaire is among those featured in Josh Knelman's book, Hot Art

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